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Mark D
Mark D, Enrolled Agent
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Regarding Taxes Length Accountants keep returns

Customer Question

How long is a CPA required to keep copies of your tax returns by law? I heard it was 7 years and I have an accountant who did my books two years ago and refuses to give me any of my paperwork for that year and a copy of the return.
Submitted: 6 years ago.
Category: Tax
Expert:  Mark D replied 6 years ago.
Customer

A CPA is regulated by Treasury Circular 230 and must provide the clients documents upon request. The CPA may charge a reasonable fee for copies and time spent retreiving the data. Books done two years ago should still be retained by the CPA. Complaints can be made to your state board of accountancy.

http://www.irs.gov/pub/irs-utl/pcir230.pdf

 

Regards,

Mark D

Mark D, Enrolled Agent
Category: Tax
Satisfied Customers: 989
Experience: MBA, EA, Specializing in Business and Individual Tax Returns and Issues
Mark D and 5 other Tax Specialists are ready to help you
Customer: replied 6 years ago.
hi, can you point out in the circular that exact passage? And this governs NYS Im assuming?

Thank you again for your help.
Expert:  jgordosea replied 6 years ago.

Greetings,

How long is a CPA required to keep copies of your tax returns by lawNot at all, though that is not well known.

Under federal law, there is not actually any requirement to retain a copy of the tax return; so long as a list is kept by the preparer of of all the taxpayers, their taxpayer identification numbers, the taxable years, and the type of returns/claims for refund prepared and has it available for inspection upon request by the IRS for a 3-year period following the close of the return period.

From the Internal Revenue Manual   Section 20.1.6.4.4  (02-08-2008) :
Failure to Retain Copy or List IRC Section 6695(d)

  1. The IRC section 6695(d) penalty applies if the preparer fails to comply with IRC section 6107(b), Copy or List to Be Retained by Income Tax Return Preparer. Under IRC section 6107(b) and the regulations thereunder, a preparer must:

    1. Retain a completed copy of the return/claim for refund, or alternatively retain a record (by list, card file, electronically, or otherwise) of all the taxpayers, their taxpayer identification numbers, the taxable years, and the type of returns/claims for refund prepared.

    2. Retain a record (by copy of the return/claim for refund or by a list, card file, electronically, or otherwise) of the name of the preparer required to sign the return/claim for refund under IRC section 6695(b) for each return/claim for refund presented to the taxpayer.

    3. Make such copy or list available for inspection upon request by the IRS for a 3-year period following the close of the return period (See IRC section 6060(c) for the definition of "return period" ).

     

  2. If there is an employment arrangement between two or more preparers, the requirement to retain a copy or list only applies to the person who employs (or engages) one or more other preparers. Similarly, if there is a partnership arrangement, the requirement to retain a copy or list only applies to the partnership. Treas. Reg. 1.61071(c).

  3. The IRC section 6695(d) penalty does not apply if the failure was due to reasonable cause and not due to willful neglect. Thus, the penalty for failure to retain a copy or list will not be imposed solely because:

    1. A person is a preparer under Treas. Reg.NNN-NN-NNNNa)(2) and (b), because of giving advice on specific issues of law.

    2. A person is a preparer under Treas. Reg.NNN-NN-NNNNb)(3) because of preparing another return (e.g., the partnership return) which affects the amounts reported on the return in question (e.g., the partner's return)

     

 The common (and best) practice is for the preparer to keep and later make available complete copies of tax returns; but it is not actually a legal requirement.  

I hope this helps for how long a CPA, EA or attorney is required to keep copies of your tax returns, by law.

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